In depth: State-owned IPOs analyzed



Thu, 22 Mar 2018 - 03:23 GMT


Thu, 22 Mar 2018 - 03:23 GMT

FILE – Ministry of Finance to release shares for 23 partly and fully state-owned companies.

FILE – Ministry of Finance to release shares for 23 partly and fully state-owned companies.

CAIRO – 22 March 2018: Ministry of Finance announced Sunday a list of 10 state-owned companies that will be released as initial public offering. The ministry also revealed a list of 10 companies that will have additional shares listed.

With the state offering 15 percent to 20 percent of each of the companies listed over the next 24 to 30 months, the cumulative value of the listings is expected to rise to LE 80 billion, raising the collective market capitalization to LE 450 billion, according to a statement from the Ministry of Finance.

Minister of Finance Amr El Garhy revealed on Sunday that the first stake sale will be taking place within three months, although he did not specify which companies will be included in this sale. Despite Garhy not stating the companies, it is expected that Enppi, a state-owned energy firm, will be piloting the program. The first state-owned bank to list, Banqu du Caire, will be taking place after the fourth quarter (Q4) of 2018.

Companies to be listed for the first time or have additional shares listed:

Banking and Finance: Banque du Caire, Misr Insurance, Bank of Alexandria, Housing and Development Bank and e-Finance.
Oil and Gas: Enppi, Middle East Oil Refinery (MIDOR), Alexandria Mineral Oils (AMOC), Assiut Oil Refining Company (ASORC) and Egyptian Drilling Company.
Petrochemicals: Sidi Kerir Petrochemicals (Sidpec), Egyptian Ethylene and Derivatives Company (Ethydco), Abu Qir Fertilizers, Egyptian Methanex Methanol Company (EMethanex), Egyptian Linear Alkyl Benzene Company (ELAB) and El Wadi Phosphate Company.
Transportation and Logistics: Alex Container and Cargo Handling, Port Said Container & Cargo Handling and Damietta Container & Cargo Handling.
Industry: Egyptalum.
Real Estate: Heliopolis Housing & Development and Madinat Nasr Housing and Development (MNHD).

The government's IPOs and additional shares listed include three banks, as well as an e-Finance company.

The first bank, Housing and Development Bank, is currently owned by a few state institutions; the New Urban Communities Authority owns 29.8 percent of the shares, Misr Life Insurance Company owns 8.9 percent of the shares, Misr Insurance Company owns 8.29 percent of the shares and the Egyptian Endowments Authority owns 5 percent of the shares. The rest are owned by non-state institutions and companies.

Commenting on this, a government source told Egypt Today that the proportion and timing of the launch of the bank within the program of government listings in the Egyptian Exchange will be determined at a later date.

The Housing and Development bank engages in the provision of banking and finance services. Its operations are carried out through the following business segments: corporate and incorporate banking, investments, individuals and others. The corporate and incorporate sector includes current accounts, debit and credit, deposits, loans and facilities and derivatives. The investments segment deals with merging of companies, financing companies restructuring and financial tools. The individuals segment handles current, saving and deposit accounts, credit cards and personal and real estate loans. The others segment comprises of other banking activities such as fund management. The bank was founded on June 30, 1979 and is headquartered in Giza, Egypt.

The second bank to be listed is Banque du Caire, considered to be one of the oldest commercial banks operating within Egypt. As it stands, Banque du Caire is 100 percent owned by the Egyptians Ministry of Finance. It will be listed for the first time within the next 24 to 30 months.

Banque du Caire, subject to the provisions of Law No. 88 of 2003, provides all banking activities through its branches and units in Egypt. A group of investors, including businessmen and economists, established Banque du Caire on May 8, 1952 as an Egyptian joint stock company.

The third most important bank to be listed is the Bank of Alexandria. Twenty percent of the bank is state-owned, while 70.25 percent is owned by the Italian Intesa Sanpaolo and 9.75 percent is owned by the International Finance Corporation (IFC).

During 2017, the Bank of Alexandria achieved a net profit of LE 2,783 million, 83.8 percent higher than its profits for 2016. In addition, the net profit before taxes increased by 96.1 percent compared to last year, reaching LE 3,665 million.

Turning to the e-Finance company: 70 percent of the company is owned by the National Investment Bank; 10 percent by the National Bank of Egypt; 10 percent by Banque Misr; and 10 percent by the Egyptian Banks Company. e-Finance is a joint venture company.

The company established and implemented the central government’s e-payment and collection hub. It also implements and operates the government ATM and PoS network all over the country. e-Finance was established as the market leader in the field of electronic payment. Operating in Egypt, and in accordance with national and international security standards, e-Finance provides state of the art electronic payment solutions to the government and public sector in a secure environment.

On a broader horizon, Minister of Finance Amr El Garhy stated that the government's listings program will take into consideration the internal conditions of the 23 companies to be listed and the timing of the IPO. Garhy explained that a committee will, at a later date, determine which companies are to be listed when, depending on research and analysis.

Garhy further revealed to Egypt Today that the government is expected to offer between 15 and 30 percent of the fully or partly state-owned companies on the stock market. The minister further elaborated that there are companies that are only 20-percent-owned by the government, in which case, he explained, the government will either list 15 percent or 20 percent of their stakes in the company.

This will be determined, according to Garhy’s statements to Egypt Today, in coordination with the concerned parties in the economic sectors and in accordance with the internal conditions of the Egyptian companies and the economy, as well as the progress in the government listings program, which will be implemented over two and a half years.



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